africa Energy Finance Mozambique Zambia

ZESCO to clear Mozambique’s US$53M power debt

Zambia energy minister Mathew Nkhuwa says it has been planned for Zesco to pay Electricity of Mozambique US$53 million to settle an outstanding debt for power import. Last week, some media sections reported that Electricity of Mozambique (EDM) had suspended power supply to Zesco following a debt of US$70 million.

In Parliament yesterday, during questions for oral answer, Mazabuka Central UPND member of parliament Gary Nkombo asked Nkhuwa (a) why Electridade de Mozambique (EDM) has suspended the supply of electric power to Zesco Limited, (b) how many megawatts were being imported by Zesco Limited (c) what the impact of the suspension of power supply on the Zambian electricity consumers is and, (d) what the way forward on the matter was.

In response, Nkhuwa explained that in 2014/2016, Zambia experienced severe drought, leading to low water levels in the dams.

“This led to the country experiencing a power deficit of more than 1,000 mega watts. The power deficit made Zesco effecting… load-shedding in order to preserve water in the dams and thus, avoid a complete shutdown of generating plants. In an effort to enhance power supply in the country and mitigate the power deficit which had resulted in massive load-shedding, the government of the Republic of Zambia, through Zesco, procured emergency power imports in order to keep the economy running, especially in the mining, SMEs and agriculture industries,” Nkhuwa noted.

“I wish further to state that the power import contract [between] EDM and Zesco expired in January 2018 and was not suspended as reported by the media. Zesco decided not to renew the power import contract because we had and still have sufficient water in the dams, [for] Kariba North and Kafue Gorge power stations, to generate enough electricity to meet national demand following good rainfall in 2017 and in 2018.”

He added that Zesco Limited contracted EDM to supply 150 mega watts over a two-year period, starting from January 2016 to January 2018.

“The country has enough electricity to meet national demand and therefore, there is no impact [of the ‘suspension’ of EDM contract] on the consumer. You may further wish to note that currently Zesco is upgrading a system and certain consumers might experience disruptions…” he said.

And the minister pointed out that Zesco, with the help of government of the Republic of Zambia, had been paying for emergency power imports it contracted from EDM.

“However, there are still outstanding amounts which Zesco is working hard to liquidate in the shortest possible time. As of 31st May 2018, the outstanding amount for EDM power imports was US$53 million, as opposed to US$70 million which was reported in the media. We would further state that the two public utilities, EDM and Zesco, continue to enjoy good relations,” he said.

But Nkombo, in a follow-up question, asked when Zesco would pay the outstanding US$53 million debt to EDM.

In response, Nkhuwa said: “There is a plan which has been put in place and we are in the process of paying this money. This is not a lot of money and we have been paying and the debt will be dismantled in due course. But to give time[frame] is not possible at the moment.”

Nkombo, who is opposition UPND whip in the House, further asked why Zesco had to put a plan in place for paying back when, according to him, President Edgar Lungu signed a loan guarantee on behalf of the country’s sole power utility, Zesco.

Nkhuwa then said “what Honourable Nkombo is saying is mere speculation because there is no loan that the government of the Republic of Zambia has signed of $500 million.”

“From where I sit as Minister of Energy, I don’t know that President Lungu signed that deal – maybe my colleague at the Ministry of Finance…” said Nkhuwa.

Source: The Mast

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